The diverse landscape of Colorado has become so popular with travelers that the state now recognizes tourism as one of its largest industries. In fact, without the high traffic of travelers bringing $1.5 billion into the economy every year, each Colorado household would have to pay an average of $670 annually in additional taxes.
In 2021, visits to the state increased to 84.2 million trips, with overnight stays accounting for 43% of all visits. But how is the destination performing today? And where are the best places to invest in property for a successful Airbnb or short term rental business in Colorado? We’re taking an in-depth look at the state’s top performing destinations based on key performance indicators from reliable market data.
The city of Colorado Springs sits on the eastern foot of the Rocky Mountains, near Pikes Peak. It draws in an average of 6 million visitors per year, with community businesses, including accommodation and attractions, hoping to see even more footfall during this year’s peak season.
Likely due to the destination's beautiful scenery and landmarks, short term rentals in the area have witnessed growth over the past couple of years. For example, full-year occupancy rates as of March 8 in 2023 vs 2021 were 5 percentage points higher. Every type of property seems to have benefited from this increased demand over the past two years, with 1 bedroom properties reporting a 68% rise in nights sold for the entire segment between 2021 and now, 2 bedroom properties 70%, 3 bedroom properties 87%, and 4+ bedroom properties 51%.
To keep up with this demand, available properties in Colorado Springs increased by 27% in 2022, reaching 2,834 vacation rentals. This figure has also continued to increase slowly throughout 2023, with current figures sitting at 2,936. However, the recorded levels of demand remain higher than new property supply, creating an opportunity for investors and property managers to expand their inventory in this destination market.
The good news for those interested in setting up a new short term rental in Colorado Springs is that, as occupancy rates have risen, the revenue per available room (RevPAR) has also increased. RevPAR for the destination is now almost double what it was in 2021. But before making an investment, bear in mind that average daily rates (ADR) in Colorado Springs have changed little in recent years (2023 ADRs are only 5% above 2021’s, which, when we factor in inflation, actually indicates a slight decline).
Unsurprisingly, Denver, the state’s capital, is a major tourist destination. It welcomed 31.7 million visitors in 2021 alone, with over half (16.6 million) staying overnight. Dating back to the Old West era, this popular capital city features historical landmarks from the 19th century, modern museums, and is a jumping-off point for Rocky Mountain ski resorts.
The city has, in many ways, out-performed Colorado Springs in terms of short term rental success in recent years. Occupancy rates of vacation rental properties in the area have increased by 7 percentage points since 2021. And, unlike Colorado Springs, the destination’s ADRs have shown positive movement, increasing 12% in 2022 and a further 4% in 2023. Property managers and hosts can now expect to charge an average of $168 per night for accommodation in Denver.
Every property type has seen monumental growth between 2021 and now, with 1, 2, and 4+ bedroom properties recording rises in nights sold between 67%-83%. Three-bedroom properties have witnessed the most growth in the area, with demand rising by 97% between 2021 and 2023.
As expected, with occupancy and ADR increasing, RevPAR has shot up — rising 54% as of March 8th in 2022 and a further 46% for the same period in 2023 — making the destination a very appealing prospect for investors and property managers/hosts looking to maximize profits as travel rebounds. So far, the area has witnessed a 17% year-over-year (YoY) increase in accommodation supply between 2021 and 2022 and a further 9% increase this year, taking the number of available vacation rental properties to 5,553. But since occupancy has almost doubled in the same time period, there’s still plenty of room for new properties to enter the market and reap the benefits of this destination’s popularity.
- Short term rentals in Colorado Springs are witnessing growth in both occupancy, but RevPAR has fallen over the past couple of years in real terms.
- The city of Denver is seeing even greater success with ADRs in the area on a much more positive upward trend.
- Both Colorado destinations show a gap in market supply, pointing towards great investment potential for those looking to expand their businesses in 2023.
Interested in finding out more about Colorado Springs or Denver? Or maybe you have another destination in mind and want to calculate rental projections, revenue capabilities, and more. Get in touch with our team today for a demo of our in-depth short term rental data dashboard, which can help you get the most out of your property business strategy and support you in reaching your growth goals.